A person acquires title to fungible goods by mixing them.
To avoid liability for negligence, a business owner must protect its patrons against all
risks.
Stocks represent the borrowing of funds by firms.
Downloading software or music into a computer’s random access memory without
authorization is copyright infringement.
A receipt issued by a warehouser for goods stored in a warehouse is a bill of lading.
A famous trademark may be diluted only by the unauthorized use of an identical mark.
Joint ownership of property in and of itself creates a partnership.
If a buyer breaches a contract and the seller resells the goods to another party, the seller
cannot recover any loss from the breaching buyer.
A void contract is enforceable if it is in writing.
A buyer who accepts nonconforming goods cannot revoke the acceptance.
Mandatory arbitration clauses in employment contracts are not enforceable.
Employer who willfully violates safety regulations can be prosecuted under state laws.
A mortgage must be in writing to comply with the Statute of Frauds.
In a repayment plan case, the plan must provide for payment of all obligations in full.
The doctrine of sovereign immunity can immunize a foreign nation from the
jurisdiction of U.S. courts.
Rescission is the substitution of one party to a contract for a third party, who agrees to
assume the contractual duties.
Section 10(b) of the Securities Exchange Act of 1934 covers only corporate officers and
directors.
In a share exchange, some or all of the shares of one corporation are exchanged for
some or all of the shares of another corporation.
Trade dress has the same legal protection as trademarks.
A sole proprietorship lacks continuity on the death of the proprietor.
Private offerings of securities in unlimited amounts can be exempt from the registration
requirement of the Securities Act of 1933.
A novation revokes and discharges a prior contract.
Delivery of intangible personal property must be done by constructive delivery.
Generally, a tenant must pay agreed-to rent even if the tenant moves out as long as the
move is unjustifiable and the lease is in force.
A failure to return personal property is conversion even if the rightful owner consented
to the initial taking.
For an effective bailment, the bailor must deliver possession of the bailed property with
its title.
A business firm may have an insurable interest in the life of any of its employees,
except a key employee.
A corporate officer can be an agent for the corporation.
Under their police powers, states can regulate only public activities, such as political
demonstrations.
Punitive damages are intended to punish a wrongdoer and deter others.
The consideration paid to an insurer to obtain an insurance policy is the premium.
Jaime, an accountant, contracts to perform services for Kase. Jaime acts in good faith
and conforms to generally accepted accounting principles, but makes a mistake in
judgment. Jaime is most likely
A.liable if Jaime failed to discover a defalcation.
B.liable if Jaime failed to discover a fraud.
C.liable if Jaime failed to discover an impropriety.
D.not liable.
Frothy Beverage Corporation is a public company whose shares are traded in the public
securities markets. Under the Securities Act of 1933, Frothy is required to
A.contribute to the operations of national stock exchanges.
B.disclose financial and other information about its securities.
C.engage in market surveillance to deter undesirable practices.
D.solicit proxies for voting.
Electric Autos, Inc., sells cars to consumers. To avoid liability for oral express
warranties, each sales agreement should note that a car is sold
A.as is.
B.in perfect condition.
C.subject to warranties included in the written contract only.
D.with no known defects.
Ian buys a cell phone in Jiffy Mart, using the means that accounts for more retail
payments than any other. This means of payment is
A.a commercial check.
B.a debit card.
C.a personal check.
D.a trade acceptance.
Brad is an employee of Custodial Service, Inc. In deciding whether Brad acts within the
scope of his employment when he commits a tort against Didi, a court will not consider
whether
A.Brad indicated that he was acting on behalf of Custodial.
B.Custodial authorized the act.
C.Custodial furnished the means by which the injury was inflicted.
D.the act is one commonly performed by employees for their employers.
Mari buys 500 shares of common stock in National Livestock Traders, Inc. As a
shareholder of record, Mari owns a proportionate interest in terms of
A.control, earnings, and net assets.
B.control only.
C.earnings and net assets only.
D.neither control nor earnings and net assets.
China and India form an agreement to govern their commercial exchanges with one
another. This is
A.a bilateral agreement.
B.a lateral agreement.
C.a multilateral agreement.
D.a unilateral agreement.
Computer World (CW), after repossessing a multimedia system from Dave, a consumer,
decides to keep the system instead of reselling it. CW sends written notice to Dave. CW
can now keep the system
A.only after attempting an unsuccessful public sale of the system.
B.only after notifying any other appropriate secured party.
C.unless Dave objects.
D.under any circumstances.
Steve steals one of Tricia’s checks and forges her signature. Tricia’s bank, Unity Bank,
pays the check. Tricia can recover from
A.Steve, but not Unity Bank.
B.Unity Bank, which cannot recover from Steve.
C.Unity Bank, which can recover from Steve.
D.no one.
As a judge, Potter applies common law rules. These rules develop from
A.administrative regulations.
B.court decisions.
C.federal and state statutes.
D.proposed uniform laws.
Nouveau Riche Corporation’s officers, directors, and shareholders buy and sell
securities. SEC Rule 10b-5 applies to
A.only the purchase or sale of a security by a financial corporation.
B.only the purchase or sale of a security involving an officer or director.
C.only the purchase or sale of a security involving a shareholder.
D.the purchase or sale of any security.
Glen falsely accuses Hu of stealing from Island Tours, Inc., their employer. Glen’s
statement is defamatory only if
A.a third party hears it.
B.Hu has not been caught.
C.the statement is puffery.
D.the statement is TRUE.
John steals an old, battered bicycle that is parked, unlocked, in front of a convenience
store. He repairs, paints, and replaces parts on the bike until it is like new. The original
owner, Kim, claims the bike. The bike belongs to
A.John and Kim as tenants in common.
B.John because he made substantial improvements to it.
C.John because Kim claimed it only after John improved it.
D.Kim because John stole it.
Dani is considering forms of business organization for her financial advisory firm. Like
most states, Dani’s state requires that to form a limited liability company, she must file
with a central state agency
A.articles of certification.
B.articles of formation.
C.articles of organization.
D.no specific documents.
Chuckie, president of DrinkUp Fresh Beverages, Inc., does not apply utilitarianism to
business ethical issues. One problem with utilitarianism is that it
A.gives business profits priority over production costs.
B.ignores the practical costs of a given set of circumstances.
C.requires complex cost-benefit analyses of simple situations.
D.tends to justify human costs that many find unacceptable.
GR8 Stuf Company files a registration statement with the SEC before making an
offering to the general public. The registration contains false, immaterial statements of
which the investors are unaware. GR8 Stuf is charged with violating the Securities Act
of 1933. GR8 Stuf’s best defense is
A.the investors were not aware of the misrepresentations.
B.the issuer reasonably believed the misstatements were TRUE.
C.the offering was made available to the general public.
D.the un TRUE statements were not material.
The Warehouse Workers Union represents Valley Transfer Company’s employees in
collective bargaining negotiations over a new contract. In a memo to the employees,
Valley’s president Uri accuses the union of delaying tactics. Later, Troy, a Valley
employee, tells Stella, his supervisor, that Uri is “a m*****f****r.” Stella fires Troy for
violating a company rule against “threats.” Troy files a suit against Valley. Under the
holding in Media General Operations, Inc. v. National Labor Relations Board, the court
will most likely conclude that the National Labor Relations Act
A.did not protect Troy from discharge.
B.does not apply to the use of profanity.
C.protected Troy from discharge.
D.requires Troy’s immediate arrest.
Bret contracts to work for City Construction Corporation (CCC) during July for $4,500.
On June 30, CCC cancels the contract. Bret declines a similar job with Downtown
Builders, Inc., which would have paid $4,000. Bret files a suit against CCC. As
compensatory damages, Bret can recover
A.$4,500.
B.$4,000.
C.$500.
D.$0.
Canada and the United States are signatories of the Berne Convention. Doug, a citizen
of Canada, publishes a book first in Canada and then in the United States. Doug’s
copyright must be recognized by
A.all of the signatories of the Berne Convention.
B.Canada and the United States only.
C.Canada only.
D.none of the signatories of the Berne Convention.
Zero Sum Games Corporation has forty-three shareholders. The minimum number that
must be present at a meeting for a shareholders’ vote is
A.all of the shareholders.
B.a quorum.
C.a proxy.
D.three of the shareholders.
Jane offers to sell Kyle three desks for his Lights & Lamps Company administrative
office. Kyle sends a rejection first, then changes his mind and sends an acceptance.
Whether they have a contract is determined by
A.Kyle’s rejection.
B.Kyle’s subjective intent.
C.whatever Jane decides.
D.whether Kyle’s rejection or acceptance is received first.
Flexo Trucking Company transports hazardous waste. Garn is a Flexo driver, whom the
company knows drives longer hours than federal regulations permit. One night, Garn
exceeds the limit and has an accident. Spilled chemicals contaminate Hill City’s water
source, forcing the residents to move away. Flexo acted unethically because
A.Flexo showed reckless disregard for Hill City’s residents and others.
B.Garn exceeded the federal time limit.
C.harm was caused by an unfortunate accident.
D.Hill City should have better protected its water source.
Thermal Appliances Corporation, a U.S. firm, orally agrees to sell six freezers to Pisa
Pizza, Ltd., in Italy. Thermal fails to deliver. Under the United Nations Convention on
Contracts for the International Sale of Goods (CISG), Pisa Pizza can
A.enforce the agreement.
B.not enforce the agreement because it is not in writing.
C.not enforce the agreement because the CISG does not apply.
D.not enforce the agreement because Thermal is a U.S. firm.
Superb Construction, Inc., contracts to build a store for Tasty Confection Company,
with Tasty’s payment due on June 1. On June 1, Tasty’s bank is closed, and for this
reason, Tasty claims it cannot pay Superb on time. In this situation
A.Tasty’s bank is in breach of contract.
B.Tasty is in breach of contract.
C.the contract is discharged.
D.the contract is suspended.
Home Delivery Corporation and Interstate Transport, Inc., sign an agreement that
provides for the payment of “$1,000 by whichever party commits a material breach of
the contract that creates damages difficult to estimate but approximately $1,000.” This
is
A.a liquidated damages clause.
B.a mitigation of damages clause.
C.a nominal damages clause.
D.a penalty clause.
Fact Pattern 18-2
General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1
million from Helpful Finance Corporation for a security interest in the equipment. The
next day, GLC borrows $513,000 from Interstate Bank, also for a security interest in the
equipment. GLC defaults on the loans.
Refer to Fact Pattern 18-2. Suppose that two weeks after GLC takes possession of the
equipment, Helpful and Interstate file financing statements, with Interstate filing first.
In that circumstance, the party with priority to the equipment is
A.GLC.
B.Helpful and Interstate proportionately.
C.Helpful only.
D.Interstate only.
Salt Corporation wants to acquire or merge with Pepper Corporation. The board and the
shareholders of Pepper are resisting. Salt should
A.file a plan of merger with the secretary of state.
B.file an article of merger with Pepper.
C.make a tender offer to the shareholders of Pepper.
D.make a tender offer to the shareholders of Salt.
Myron is an employee of Nero. Either party can terminate the employment relationship
at any time for any reason without liability. With respect to the employment-at-will
doctrine, this is
A.an example of the doctrine.
B.an exception based on contract theory.
C.an exception based on public policy.
D.an exception based on tort theory.
Luke owns a farm near Marshalltown, Iowa, with stands of trees serving as windbreaks.
Luke grows corn on the property. When Luke sells the farm to Nina, if the contract does
not specify otherwise, the sale includes
A.neither the crops nor the trees.
B.the crops and the trees.
C.the crops only.
D.the trees only.
Fleet Feet, an online travel company, buys blocks of rooms from Grande Hotel, a hotel
in Hyper City, at a wholesale rate. Fleet Feet resells the rooms to consumers at a retail
rate. One recent effort by cities to collect taxes from e-commerce has focused on
A.hotels that sell blocks of rooms at wholesale rates.
B.non-resident consumers who reserve rooms in in-state hotels.
C.online travel companies.
D.the dire financial straits of the cities during the latest recession.
New York enacts a statute that requires a label on a video game to warn parents when
“the range of options available to a player include dismembering or sexually assaulting
the image of a human being.” On appeal from a challenge by gamemakers, the state
asks a federal court to enforce the statute. Based on the decisions of other federal courts
in cases involving similar statutes, the court in this case is most likely to
A.refuse to extend restrictions on sex-based content to violence in video games.
B.expand the label’s warning to include other forms of violence.
C.impose market-share liability on makers of violent video games.
D.replace the voluntary rating system currently in use.
The term for the legal death of the artificial “person” of Skytop Services, Inc., or any
other corporation, is
A.surviving corporation.
B.dissolution.
C.takeover.
D.winding up.
Lenore is the sole proprietor of Mall Kiosks. With respect to contracting for her own
business interests, Lenore is
A.an agent and has the authority.
B.an agent but does not have the authority.
C.not an agent and does not have the authority.
D.not an agent but does have the authority.
Ron makes a contract with Stu that indirectly benefits Tim, although neither Ron nor
Stu intended that result. Tim is
A.a delegatee.
B.an assignee.
C.an incidental beneficiary.
D.an intended beneficiary.
Diamond Financial Planners employs Ella, who is the firm’s most productive performer.
Ella, dissatisfied with the commission structure, quits to work for Feldstar Investments,
Inc. She takes her list of Diamond clients to induce them to switch to Feldstar. Trade
secrets law covers
A.Diamond’s list of clients.
B.Ella’s performance.
C.Feldstar’s commission structure.
D.none of the choices.